Rethinking Local Affordable Housing Strategies · 2016-07-21 · extreme versions of traditional...

THE BROOKINGS INSTITUTION METROPOLITAN POLICY PROGRAM

Metropolitan Policy ProgramBruce Katz, Director

The Brookings Institution

Housing Washington 2004September 21, 2004

Rethinking Local Affordable Housing Strategies


What are the housing challenges in Washington State?

Rethinking Affordable Housing Strategies

I

II What is a winning affordable housing playbook?

III Where does Washington go from here?


I What are the housing challenges in Washington State?


What are the housing challenges in Washington State?I

Housing challenges vary across and within metro areas

Housing costs are high and continue to rise

Several factors contribute to the high cost of housing


1 Hawaii 39.65%2 California 37.02%3 Nevada 31.82%4 New Jersey 31.54%5 Washington 31.31%6 New York 31.21%7 Florida 30.61%8 Oregon 30.23%9 Washington D.C. 29.57%

10 Utah 28.97%

Housing Costs Greater Than 30% of Income

National Average 26.66%

1 California 42.26%2 Florida 40.87%3 New York 40.55%4 Oregon 40.01%5 Washington 39.10%6 Nevada 39.07%7 Colorado 38.73%8 Arizona 38.63%9 New Mexico 37.62%

10 New Jersey 37.54%

Rent Greater Than 30% of Income

National Average 36.85%

Washington’s rent and mortgage burdens are among the highest in the country

Source: U.S. Census Bureau, 2000


The average rent for a 2 bedroom apartment in Washington is $788, 16th highest in the country

Source: National Low Income Housing Coalition, 2003

Rank State Average Rent

11 Colorado $847

12 Nevada $836

13 Illinois $823

14 Virginia $821

15 Minnesota $788

16 Washington $788

17 Arizona $780

18 Florida $742

19 Delaware $731

20 Georgia $728

21 Vermont $717


And the median home price in the state has increased over 49% in the last 10 years, from $136,000 to $203,800

Median home price from 1995 to 2003Source: Washington Center for Real Estate Research

$0

$50,000

$100,000

$150,000

$200,000

$250,000

1995 1996 1997 1998 1999 2000 2001 2002 2003


Homeownership rates in Washington consistently lag behind the national average

Homeownership rates in Washington and the U.S., 1990-2003Source: U.S. Census Bureau

58.0%

60.0%

62.0%

64.0%

66.0%

68.0%

70.0%

1990

1992

1994

1996

1998

2000

2002

U.S.(68.3%)

Washington(65.9%)


Washington’s desirability boosts housing prices

From The Seattle Times, May 13, 2004

Source: National Policy Research Council, 2004

According to America's Best Cities and States: The Annual Gold Guide to Leading Rankings, Seattle ranked 11th among cities while Washington state was fifth among states.


The state’s high tech economy also creates a “hot” real estate market

• The economic boom of the 1990s raised employment and homeownership in most areas, but also drove up rents more than one and a half times faster than inflation (HUD, 2000)

• “New economy housing markets are…faster and more extreme versions of traditional housing markets”

(Landis, Elmer, and Zook, 2001)

• A high-tech presence significantly contributes to critical housing problems for low and moderate income renters and owners (Quercia, Stegman, and Davis, 2001)


“A high-tech presence significantly contributes to critical housing problems for low and moderate income renters and owners”

• High-paying tech jobs going to highly educated people– Raises housing prices– Low income households and those with less education

see their incomes fail to keep up with inflation

• Developers in fast-paced, high-tech economies have focused on the high end market– Leaves fewer choices for low and moderate income

households

(Quercia, Stegman, and Davis, 2002)


For many families, wages are insufficient to keep pace with housing costs. In Washington, 86 hours must be worked per week at minimum wage to affordably rent a 2-bedroom apartment


Rank State Hours Needed26 Wisconsin 9027 Vermont 8828 New Mexico 8729 Rhode Island 8730 Missouri 8631 Washington 8632 Indiana 8533 Kansas 8334 South Carolina 8235 South Dakota 8236 Tennessee 81


A renter in Washington needs to make over $15/hour full time to be able to affordably rent an average 2-bedroom apartment at fair market value


Rank State Wage Needed42 Colorado $16.29 41 Nevada $16.08 40 Illinois $15.83 39 Virginia $15.79 38 Minnesota $15.16 37 Washington $15.15 36 Arizona $15.00 35 Florida $14.26 34 Delaware $14.06 33 Georgia $14.00 32 Vermont $13.78


The supply of affordable housing is not keeping pace with demand

Source: Washington Center for Real Estate Research

CountyAffordable Housing

Demand (Need)

Current Supply of Affordable

Units

Shortage of Affordable Units

King 55,089 45,117 9,972Pierce 27,053 10,363 16,690Snohomish 14,796 425 14,371Spokane 16,297 7,772 8,525Yakima 7,353 1,721 5,632Statewide 195,751 98,427 97,324


The entire state faces a rental housing challenge: No county has a a ratio of affordable housing units to extremely low income renter households over .74

Very high demand for affordable rental housing


Homeownership is also unaffordable throughout the state: Very low income owners’ average housing cost burdens are at least 50% in every county

Very high demand for affordable owner housing


But challenges vary

Differences in income levels, poverty rates, and housing costs mean that the nature and extent of

the housing challenge differs across the state


$0

$10,0

00

$20,0

00

$30,0

00

$40,0

00

$50,0

00

$60,0

00

$70,0

00

Yakima

SpokaneBellinghamThe 25 West Coast Metros

United StatesRichland/Kennew ick/Pasco

Portland/Salem

Seattle/Tacoma/Bremerton

Household incomes in Washington metro areas vary across the state

Median HH Income for the 25 West Coast Metro Areas


In metros like Seattle, high incomes drive up the cost of housing

West Coast Metros


While poverty rates for the state are relatively low, some metros fall behind

Poverty Rates for the 25 West Coast Metro Areas


In metros like Yakima, high poverty rates also make housing unaffordable for many

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Yakima

Bellingham

The 25 West Coast Metros

Richland/Kennewick/Pasco

United StatesSpokane

Portland/Salem

Seattle/Tacoma/BremertonWest Coast Metros


The Seattle metro area: Looking closer


Although the Seattle/Tacoma metro’s overall poverty rate is low, concentrated pockets of poverty still exist

Less than 10%

10%-19.9%

20%-29.9%

30%-39.9%

More than 40%

Individual poverty rates by census tractSource: U.S. Census, 2000

People experiencing high or extreme levels of poverty are found in these neighborhoods within the Seattle metro area


Minority populations are also concentrated in this region

Percent of Non-White individualsSource: U.S. Census, 2000

Neighborhoods with a majority of non-white individuals are found here

Less than 10%

10%-24.9%

25%-49.9%

50%-74.9%

More than 75%


Strong markets versus weak markets: Seattle and Spokane

Source: U.S. Census, 2000

12.3%

8.5%$37,308

$50,733

Seattle/Tacoma Seattle/TacomaSpokane Spokane

Median household income is much lower in Spokane

And poverty rates are much higher in Spokane


Strong markets versus weak markets: Seattle and Spokane

Source: National Association of Home Builders

High incomes in the Seattle metro area are not

enough to make homes affordable for most families

And low home prices in Spokane are not enough

to compensate for low incomes in the metro area

MetroMedian Sales Price

Median Family Income

Affordable for median income families

Rank

Seattle $234,000 $77,900 63.1% 133Spokane $125,000 $46,600 66.1% 126U.S. Average $160,000 $54,400 64.8%

Result: Both metros are among

the worst in the country in terms of home affordability


Different markets, same problem

Strong Market Weak Market

High Demand for Affordable Housing

(Seattle) (Spokane)


What is a winning affordable housing playbook?


I

II

What are the housing challenges inWashington State?

III Where does Washington go from here?


Seven principles for success

1. Make Policy Goals Explicit2. Tailor Housing Strategies to Local Market Conditions3. Housing Markets are Regional4. Income Policy is Housing Policy5. Regulatory Policy Makes a Difference6. Race Matters7. Implementation Matters


Principle One: Make Policy Goals Explicit

The main goal should be housing that supports healthy families and communities


Principle One: Make Policy Goals Explicit

1. Preserve & expand housing stock

2. Make housing affordable and available

3. Promote racial & economic diversity

4. Help households build wealth

5. Strengthen families

6. Link housing with supportive services

7. Promote balanced metropolitan growth


Principle Two: Tailor Housing Strategies to Local Market Conditions

Goal Strong Market (Seattle)

Weak Market (Spokane)

Preserve and Expand Stock 1 7Make Housing Affordable 2 1Promote Diversity 3 5Help Build Wealth 6 6Strengthen Families 5 4Link Supportive Services 4 3Promote Balanced Metro Growth 7 2

Priorities vary depending upon the type of market


Principle Three: Housing Markets are Regional

Example: The Seattle metro area

47,115

346,255

22,413

311,650

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

1980-1990 1990-2000

citysuburb

Population increase, 1990-2000Source: Living Cities Census Series

The Seattle suburbs have

increased by over 250,000 more

people than the city


> 7,000

4,000-7,000

2,800-3,999

1,400-2,799

< 1,400

The resulting growth looks like this:

1970Persons per Census tract

Source: US Census data, Neighborhood Change Database

Downtown Seattle




> 7,000

4,000-7,000

2,800-3,999

1,400-2,799

< 1,400


Downtown Seattle


Policy Response: Housing markets are regional—Housing policies should be, too

Do not cluster affordable homes in low-income neighborhoods, especially in the core

Enable low-income households to live closer to employment centers and better schools

Aim for this… …instead of this


Principle Four: Income Policy is Housing Policy

Source: EITC Interactive Site, The Brookings Institution’s Metropolitan Policy Program

Those claiming the earned income tax credit in Washington have increased markedly in recent years

275,000280,000285,000290,000295,000300,000305,000310,000315,000320,000

1997 1998 1999 2000 2001 2002


Income Policy is Housing Policy

T acomaT ac om a

Sea t t l e and B e l l evueSea t t l e and B e l l evue

Portland--Vancouver OR--WA

Seattle--Bellevue--

Everett, WA

Tacoma, WA

Olympia, WA

Bremerton, WA

Yakima, WA

Bellingham, WA

Spokane, WA

Richland--Kennewick--Pasco, WA

0 - 5%

5 - 10%

10 - 15%

20 - 30%

30 - 40%

> 40%

Percentage RecipientsNo Data 15 - 20%

Percent of filers claiming the EITC

varies widely across Washington

Percent of filers claiming the EITC, Tax Year 2001


Income policy is housing policy

• Local leaders can impact household incomes and, by extension, housing affordability

• Raise the incomes of working families through earned income tax credit, nutrition assistance, health care, and child care

Think of affordable housing as workforce housing


Principle Five: Regulatory Policy Makes a Difference

• Building Codes• Zoning Ordinances• Rent Controls• Development Fees• Land Use Regulations• Design Requirements• Subdivision Requirements• Parking Requirements


Policy Response

• Eliminate or moderate regulatory barriers to affordable housing production

-Identify and get rid of regulations that are exclusionary or unnecessary

• Provide incentives for private developers to produce more affordable housing

-Create inclusionary housing policies to improve supply of affordable housing


Principle Six: Race Matters

Percent of non-Asian minority elementary students by schoolSource: Metropolitan Area Research Corporation


Race matters

• Implement policies that do not reinforce patterns of segregation and discrimination

• Be aware that “color blind” policies may not work as intended if segregation and ethnic inequalities are ignored


Principle Seven: Implementation Matters

Housing policy needs to be implemented in an integrated, accountable and sustainable fashion

Integrated Accountable

0

0

0

0

0

1

1

1

Sustainable


Implementation matters

• Housing programs should connect directly with other neighborhood interventions (e.g., schools)

• Hold implementing agencies accountable through performance measures

• Economic integration is the principle vehicle for sustainability


Set clearly defined performance measures

Goal Short-term Indicator (1-5 years)

Long-term Indicators (5-20 years)

Share of units affordable for range of incomes

Number of overcrowded housing units

Preserve and Expand

Affordable Housing Stock

Number of units built or rehabbed

Number of units affordable to range of incomes

Number of units improved or upgraded

Number of physically deficient units

Example:


An example of integrated affordable housing policy: Murphy Park of St. Louis, Missouri

George L. Vaughn High Rises, 1995

Murphy Park Development replaced the original George L. Vaughn High Rises

Murphy Park, Today

• Partnered with corporate and philanthropic groups to improve the local school

• Aimed to increase economic diversity to promote sustainable economic performance

• Included townhouses, garden apartments, and single-family homes


An example of integrated affordable housing policy: Murphy Park of St. Louis, Missouri

The Results

• Performance at the local school dramatically improved, with thepercent of students reading at their grade level rising from under 20% to 60%

• The developers were successful at attracting a much more economically integrated community

• The median household income rose by 18 percent between 1989 and 1999, compared to four percent regionally

• Private investment in the form of residential and commercial development has since located in the surrounding area


What is a winning affordable housing playbook?

Where does Washington go from here?


I

II

What are the housing challenges inWashington State?

III


Washington needs to connect housing policy to core state priorities

AffordableHousingPolicy

EconomicCompetitiveness

SmartGrowth

StrongFamilies

QualityEducation


www.brookings.edu/metro

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